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Ambassador Robert Lighthizer issues Statement on Release of August 2020 Trade Data

October 06, 2020
CPA’s Take: Today USTR Robert Lighthizer took the unusual step of issuing a statement on today’s monthly trade figures.

Washington, DC – Ambassador Robert Lighthizer issued the following statement today concerning the August 2020 trade data released by the U.S.Department of Commerce: 

[FOR IMMEDIATE RELEASE | October 6, 2020 | USTR.gov]

“The trade data released today reflect the effects of the coronavirus on the U.S. and  our trading partners. Basically, many of our partners were more negatively affected  by the pandemic than we were. Indeed, the U.S. economy has outperformed every  other G7 country. In spite of the pandemic, our goods deficit is down 2.4% year-to date. The goods deficit would have decreased by at least 6% but for a large spike in  gold imports reflecting risk-hedging strategies during the pandemic, not  underlying economics. Our services surplus is down 19%, but that is largely due to  reduced tourism, travel, and transport. As other countries recover and reopen, we  expect both imports and exports to improve substantially.” 

“Additionally, it is worth noting that our year-to-date goods deficit with China is  down 16.5%, and is likewise down with Japan (34.7%), the EU 27 (7.7%), and Korea  (7%). In the USMCA countries, the U.S. deficit with Canada is down 36% this year  and Mexico’s surplus is slightly up due to their economic downturn’s effect on their  demand for our exports."

“Overall, the Trump trade policy is working in spite of the virus. It is worth  remembering that before the fallout from the pandemic, our goods trade deficit had  been down from the previous year in five of the last six quarters, 7.2 million jobs had  been created since the election—including over 510,000 manufacturing jobs—and  median family income had increased by 6.8% in 2019, the largest increase in U.S.  history.” 

Key Points 

  • The trade deficit increased in August because America’s economy has  recovered more quickly than our trade partners’. Because of President  Trump’s leadership, coronavirus has had a smaller effect on our economy  than any other G7 nation. U.S. GDP is down 9% from a year ago compared to  21.5% for Britain, 18.9% for France, 17.7% for Italy, 13% for Canada, 11.3% for  Germany, and 9.9% for Japan. Since May, U.S. exports and imports have both  begun to rebound, but imports have recovered more quickly. With that said,  U.S. goods exports still increased from $90 billion in May to $119.1 billion in  August, a 32% increase. 
  • The trade deficit was shrinking before the pandemic. The U.S. goods trade  deficit fell by $16 billion in 2019 and has been down from the previous year in  five of the last six quarters. 
  • This year’s trade deficit increases have been driven by imports of gold  bars. Of the $22.6 billion year-t0-date increase in the trade deficit, $22  billion is attributable to a spike in non-monetary gold imports, which reflect  risk-hedging strategies by traders and investors during the pandemic and not  underlying economics. 
  • The trade deficit with China is shrinking as the Phase One Deal continues to  take effect. In August, the trade deficit with China fell $1.9 billion as exports  to China rose and imports remained level. Year-to-date, the goods trade  deficit with China also decreased by $38.2 billion (16.5%) from the same  period in 2019. 
  • Overall job growth and manufacturing job growth were strong prior to the  pandemic. Between November 2016 and February 2020, the Trump economy  added more than 7.2 million jobs, including over 510 thousand manufacturing jobs. The unemployment rate had also fallen from 5.1% in  November 2016 to 3.5% in February 2020, a 50-year low. 
  • Middle class income was surging prior to the pandemic. In 2019, median  household income rose by over $4,300 (6.8%) – the largest annual increase  on record and nearly 50 percent more than during the entire eight years of  the Obama Administration ($3,021). 
  • Manufacturing wages have continued to rise, despite the pandemic. Average  hourly earnings for production and nonsupervisory employees in  manufacturing rose by 11.4% between November 2016 and September 2020. 
  • The U.S. has already regained over half of the jobs that were lost due to the  pandemic, including over half of the manufacturing jobs. This year saw the  four best months for job growth since the government began tracking the  data in 1939: 4.8 million jobs in June, 2.7 million in May, 1.7 million in July,  1.4 million in August. In September, the economy added an additional  661,000, still the highest numbers since September 1983 if you exclude May August. These numbers include 716,000 manufacturing jobs regained since  April. Despite the CBO forecasting an unemployment rate of 16 percent in the  third quarter of 2020, the rate has already fallen to 7.9 percent, down from  14.7 percent in April. 

 

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Contact: USTR Public & Media Affairs 

media@ustr.eop.gov  


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